Pandemic lockdowns drove digital transformation in banking and insurance, propelling GVA growth to 6.5% in 2021.

Financial Services GVA Growth Jumps to 6.5% in 2021

Singapore's financial services gross value added (GVA) grew 6.5% in 2021, a sharp acceleration from the 2.6% expansion recorded in 2020, as the sector underwent significant digital transformation and welcomed new entrants during the COVID-19 pandemic. The rebound underscores how forced shifts in consumer behaviour and operational models during lockdowns translated into broad-based economic output gains for banking, insurance, and related financial activities.

The 2021 growth rate more than doubled the prior year's figure, which had been dampened by the initial shock of border closures, reduced business activity, and cautious consumer spending in the early stages of the pandemic. By contrast, 2021 saw the compounding effects of digital onboarding, contactless payments, and remote advisory services—capabilities that financial institutions had been building under duress in 2020—reach a scale sufficient to drive measurable GVA expansion.

Growth Rate (%)Source: Orionmano Industries

Digital Adoption Accelerated by Pandemic Lockdowns

The pandemic compressed years of planned digital transformation into months. According to industry observers cited by Singtel, what financial institutions had been trying to engineer for years—a push towards a cash-free society—COVID-19 accomplished in roughly one year. The shift was not merely transactional; it fundamentally altered customer expectations. Post-pandemic, customers will not view banks the same way, with digital-first engagement becoming the baseline rather than an optional channel.

The Monetary Authority of Singapore (MAS) actively facilitated this acceleration through targeted support for workforce capability building. From 8 April 2020 to 31 December 2021, MAS offered a 90% course fee subsidy—capped at S$7,000 per person per programme under the IBF-Standards Training Scheme (IBF-STS)—for self-sponsored individuals in financial institutions and fintech firms. This subsidy was extended at 80% for courses commencing between 1 January 2022 and 30 June 2022. Eligible financial institutions could also receive a training allowance of S$10 per training hour for employees undergoing IBF-accredited or recognised courses. These measures were designed to help the sector use the pandemic-related downturn in business activity to deepen employee capabilities in digital and technology-related skills.

The result was a sector better equipped to handle the surge in digital demand. Remote account opening, digital wealth management, and online insurance underwriting processes that had been secondary channels became primary revenue generators. The GVA data for 2021 reflects this operational pivot moving from cost-centre experimentation to bottom-line contribution.

New Digital Banking Licenses Transform the Competitive Landscape

The entry of digital-only banks further reshaped the sector. In Southeast Asia, regulators including MAS announced digital banking licenses, allowing new players to emerge and compete with incumbent institutions. The Temasek report on the future of Southeast Asia's digital financial services explicitly noted that new players would emerge with the announcement of these licenses.

In Singapore, the most prominent example was the consortium formed by Grab and Singtel, which progressed to the next stage in its application for a digital-only bank license. This development was notable because Grab—previously known primarily as a transport and food-delivery provider—was entering financial services as a digital-native disruptor. The Grab-Singtel consortium was one of several successful applicants for digital full bank and digital wholesale bank licenses awarded by MAS in late 2020 and early 2021, with the licensed entities expected to commence operations in 2022.

The competitive dynamic is shifting. Incumbent banks now face pressure not only from each other but from technologically agile new entrants unencumbered by legacy branch networks and legacy IT systems. These digital banks can offer lower cost-to-serve ratios, seamless user experiences integrated with non-financial ecosystems (such as ride-hailing, e-commerce, and telecommunications), and data-driven credit scoring models that reach underbanked segments. The GVA growth recorded in 2021 likely captured only the early innings of this competitive transformation; the operational impact of the new digital banks will take several years to fully materialise in national accounts data.

Looking ahead, digital financial services are expected to grow further, supported by ongoing digital transformation initiatives across the sector and continued regulatory facilitation by MAS. The combination of a reskilled workforce, new digital entrants, and entrenched consumer habits formed during the pandemic provides a structural underpinning for sustained GVA expansion beyond the immediate post-COVID recovery period. Financial institutions that invested in digital capabilities during the lockdowns are now better positioned to capture growth in a market where the line between financial services and technology continues to blur.